Temu Lawsuit Accuses Retailer of Advertising Fake Markdowns

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A proposed class action lawsuit claims Temu offers its products online at fake discounts to trick shoppers into believing they’re getting better deals than they actually are.

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The 41-page Temu lawsuit says the online megastore regularly lists merchandise at a purportedly discounted sales price, accompanied by a higher original, or reference, price with a strike through it. However, according to the case, the reference prices advertised on Temu.com are “completely fabricated” and do not represent a bona fide price at which products were previously sold.

The filing contends that the company behind Temu—defendant WhaleCo, Inc.—employs a sham pricing scheme “to give a false sense that consumers are getting a bargain to entice them into making purchases they would not otherwise make.”

The suit notes that, from a consumer’s point of view, it is unclear exactly what Temu’s struck-through reference prices represent. These crossed-out amounts could refer to a price at which an item was formerly sold on the website, or a price at which an identical or similar product was sold by other vendors, the complaint says.

Per the lawsuit, Federal Trade Commission guidelines require companies to substantiate the claims made in their advertisements, as well as all reasonable interpretations of those claims. No matter how a customer may interpret the reference prices advertised online by Temu, the retailer lacks the evidence to show that these amounts are related to actual, relevant comparative prices, the case alleges.

Instead, the complaint relays, a disclosure buried in the defendant’s terms of use and hidden as a pop-up under a faint “?” icon included in certain listings reveals the following:

Based on Temu’s disclosure language, the filing says, “it could well be that a particular item, or even a comparable item, was never offered for sale at the struck-though Reference Price by another retailer, at any time, or in any location.”

The result is that customers unknowingly rely on fictious reference prices to make their purchasing decisions on Temu.com, the proposed class action contends.

The lawsuit looks to cover anyone who, while in California, purchased at least one product from Temu.com that was represented as discounted from a higher struck-through reference price since February 24, 2020 and has not received a refund or credit for their purchase(s).

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